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Friday, February 28, 2014

Teva v. NATCO: Analysis of the Delhi High Court’s decision

Earlier in the day, I had broken
the news that the Delhi High Court had returned Teva Pharma’s plaint in its
suit, C.S. (O.S) 3193/2012, for alleged infringement of its process patent
190759 on the manufacture of glatiramer acetate (sold under the name “Copaxone”)
by Hyderabad-based NATCO Pharma. The decision was passed in an application
under Order VII, Rule 10 of the CPC filed by NATCO seeking return of the plaint
on grounds that the Delhi High Court was not the appropriate court to be seized
of the matter. Here's a link to the decision

The 2007 Litigation- First Indian Suit

Teva had filed its first Indian
suit against NATCO in 2007, CS (OS) No. 1708 of 2007, seeking injunction
against infringement of its process patent 190759. One of the prayers sought was to
restrain NATCO from exporting the allegedly infringing drugs, formulations/bulk
drugs outside India. Issues were framed in this suit in May 2012, and trial is
underway in it.

The 2009 US Litigation

In 2009, Hyderabad-based Mylan
Labs filed an abbreviated new drug application (‘ANDA’) in the US seeking
approval to manufacture and sell glatiramer acetate before the expiration of Teva's US patents. Teva sued Mylan and NATCO in the Southern District Court of New
York alleging infringement of US Patent Nos. 7199098, 6939539, 6054430, 6620847,
5981589, 6342476, 5800808, 6048898 and 6362161.

The US District court came to the
conclusion that the product sought to be sold by the defendants in the US
infringed the process claims of US6054430 and 6048898. However, the Federal Circuit invalidated
the process claims in both these patents last year, which surprisingly has not
been dealt with in the decision of the Delhi High Court.

The 2012 Litigation- Second Indian Suit

Teva filed its second Indian suit,
C.S. (O.S) 3193/2012, on grounds that NATCO’s manufacture of glatiramer
acetate in India for sale in the US and elsewhere infringed its Indian Patent 190759. Teva
admitted that its suit was a quia timet
action which was based on the apprehension that NATCO, having tied up with
Hyderabad-based Mylan labs for manufacture of the drug and having secured
regulatory approval, was bound to use its patented process in India. Reliance was ostensibly
placed on The
Hindu Business Line article of January 17, 2012 and NATCO’s annual report
for 2010-2011 which referred to the tie up between Mylan and NATCO.

If NATCO’s annual report for
2010-11 already disclosed this tie up according to the plaintiff, which is the stated basis for filing of
the second suit, why was the suit filed in November 2012, and not earlier?
Also, since one of the prayers in the 2007 suit was to restrain NATCO from
exporting drugs which infringe the process patent, where was the need to file
the second suit again seeking a cognate prayer with respect to the same patent?

From Para 8 of the decision, it also appears that the second Indian suit was filed on the basis of the US District
Court’s finding of infringement of process claims of the US patents, and parity
was sought to be drawn between the US patents and the Indian patent 190759. In
other words, according to the plaintiff, since the US District Court had come
to the conclusion of infringement of process claims of the US patents by the
defendants, the Indian Court had to apply the US District Court's findings to the corresponding
Indian patent as well..... To me, this goes against the very grain of
territoriality of patent rights. After all, every national Court has the right
to come to a different conclusion with respect to infringement based on
national standards.

Also, if the US Federal Court had ultimately invalidated the US process claims, wouldn’t it have a bearing on the
maintainability of the 2012 Indian suit given that the plaintiff’s prayers in the
suit were based on the findings of the US District Court which were no longer
valid? If yes, why did the plaintiff not deem it fit to bring the US Federal Court's decision to the Delhi High Court's attention?...

Consequently, the plaintiff
invited the Court to assume that glatiramer acetate being sold in New Delhi was
manufactured using the plaintiff’s patented process. The question that comes to
my mind is, if the patent is admittedly over the process, is it sufficient for
a patentee to institute a suit for infringement of the process patent in Delhi merely
on the basis of the above ingredients?

Importantly, the plaintiff's product patent application on glatiramer acetate, 93/Del/2003, was rejected by the Indian Patent Office in March 2009. In light of this, doesn’t the 2012 suit have the effect of
circumventing the rejection of the product patent application since the suit was based on a mere assumption that the product being sold was manufactured using the patented process? Doesn’t
the plaintiff have the burden of proving that the patented process was being
worked within the territory of Delhi, particularly when the act of
manufacturing took place in Hyderabad according to the defendant?

The plaintiff also claimed that two
processes were used by the defendants to manufacture the drug. Here’s the
extract from the plaintiff’s reply to the 7/10 application on its stance with
respect to the two processes allegedly employed by the defendants:

“The Defendants have two different Glatiramer Acetate (GA) products –
one for sale within India and the other for export to Mylan, and are using two
different manufacturing processes to make these products. The Defendants admit
this in paragraph 5 of their Written Statement as well as in the affidavit
dated 6th July 2013 filed by Dr. AKS Bhujanga Rao. This suit does not concern
the process used by Defendants for making the Glatiramer Acetate product sold
by them for the Indian market (hereinafter referred to as the “GA-first product”).
The present suit concerns the process for making the Glatiramer Acetate
product that the Defendants are manufacturing in India on behalf of Mylan for
sale outside India (hereinafter referred to as a “GA-second product”). This
submission is without prejudice to the Plaintiffs’ reasonable apprehension that
the Defendants might also be selling the “GA-second product” in India including
New Delhi....

....Therefore, the cause of action in suit CS (OS) No. 1708 of 2007 is different
from that of CS (OS) No. 3193 of 2012 and also the prayers contained therein
are clearly distinct. As explained above, the earlier suit pertained to the GA
– first product, sold in India, and the present suit pertains to the separate
and distinct GA - second product made in India for export to the US and other
countries. This necessitated the filing of the present suit.”

However, nowhere in the Plaint
was it alleged that the process was being used by the defendants within the
Delhi High Court’s jurisdiction. It wasn’t even alleged that the plaintiff
apprehended the use of the patented process in New Delhi. It is worthwhile to
note here that NATCO had categorically denied the use of the patented process
within the Court’s jurisdiction, and had also denied export of the drugs from
New Delhi. In light of this categorical rebuttal, which reportedly was never
countered by the plaintiff, there was not enough material for the Delhi High
Court to entertain the suit.

Following are the relevant
observations of the Court:

22. At the outset, it must be stated that it was repeatedly stressed by
learned Senior counsel for the Plaintiffs that CS (OS) No. 3193 of 2012 is a
quia timet action. Only an apprehension has been expressed that Natco, having tied
up with Mylan, is likely to export the infringing Copolymer-I to US and other
countries....

28. It is, therefore, clear that the case of the Plaintiffs concerns
the infringement of the process involved in the GA-second product, which the Plaintiffs
term as the ‘Mylan process’ and about the possible infringement for the
purposes of ‘export’ of the said product to the US and elsewhere.

30. In light of the above legal position, the averments in the plaint
in the instant case would have to be examined to ascertain if there is any
specific plea that there is a violation of the process patent within the jurisdiction
of this Court. The Court finds that there is no such specific averment. There
is no averment that the process patent i.e. Indian patent No.190759, or for
that matter the ‘Mylan process’, is being practised/infringed by Natco within
the jurisdiction of this Court.

This has also to be seen in the context of the
fact that there is no denial by the Plaintiffs that there is no manufacture of
the GA- second product in Delhi. There is also no denial by the Plaintiffs that
Natco has at present its manufacturing facilities only in Hyderabad.

31. Since the suit concerns a process patent, the pleadings as regards
the product being sold in Delhi or elsewhere, or the possibility of it being launched
in Delhi or elsewhere cannot justify the jurisdiction of this Court. To
recapitulate, in para 40 of the plaint it is averred that “The US Court decision
leads to an incontrovertible conclusion of infringement of rights of Plaintiffs
No. 1 and 2 in IN ‘759 based on the manufacture of glatiramer acetate by
Defendant No.2 for export and sale in the United States.”

In para 41 it is
stated that Natco’s act of manufacturing the glatiramer acetate product “for
sale in the US and elsewhere” amounts to infringement of the process patent.
The averment is not that such manufacturing of the product for export to the US
and elsewhere is happening or is apprehended to happen within Delhi. In the
circumstances, the invocation of Section 48(b) of the Patents Act 1970 by the
Plaintiffs to urge that the product obtained as a result of infringement of
process is sold or apprehended to be sold in Delhi appears to be misconceived.

The fact that Natco may have an office in Delhi or a distributor in Delhi is
not relevant given the fact that the subject matter of the suit is a process
patent, and the action brought forth is for alleged infringement of that
process for the purposes of export to the US and elsewhere.